What's Happening
Resort chain Marriot ( MAR ) will report its second-quarter results after the market close August 6, with the consensus calling for earnings of $1.36 per share. During the same period last year the company earned $1.13 per share, and the stock has fallen 4.5% on the year.
Technical Analysis
MAR was recently trading at $127.75 down $21.46 from its 12-month high and $30.85 above its 12-month low. InvestorsObserver's Stock Score Report gives MAR a 65 long-term technical score and a 69 short-term technical score. The stock has recent support above $125 and recent resistance below $133. Of the 15 analysts who cover the stock 4 rate it Strong Buy, 1 rates it Buy, 10 rate it Hold. MAR gets a score of 63 from InvestorsObserver's Stock Score Report.
Analyst's Thoughts
MAR has been stuck in a fairly tight sideways trend for the better part of the year, but is in jeopardy of falling through support and making a big move lower. If the company puts up disappointing numbers, and the stock dips below $125, there could be significant downside. The stock's valuation is a bit of a concern, with a trailing P/E of 45.1 and a forward P/E of 27, so current shareholders should definitely have an exit strategy in place just in case the quarterly numbers do not live up to expectations and the stock moves lower. The company has a good track record of posting better than expected profits, but last quarter sales were significantly lower than what analysts had forecast, and the company will need to turn that around if there is any chance of MAR erasing some of its recent losses. The street expects a small earnings beat, with a whisper number of $1.41, but the market will be closely watching the company's revenue. Analysts expect sales of $6.01 billion during the quarter, and anything lower than that number could drive shares below the stock's $125 support level.
Stock Only Trade
If you're looking to establish a long stock position in MAR consider buying the stock under $128. Sell if it falls below $118.50 or take profits if it gets to $147.25.Bullish Trade
If you want a bullish hedged trade on the stock, consider a 9/21/18 110/115 bull-put credit spread for a $0.30 credit. That's a potential 6.4% return (47.5% annualized*) and the stock would have to fall 10.3% to cause a problem.
Bearish Trade
If you want to take a bearish stance on the stock at this time, consider an 9/21/18 140/145 bear-call credit spread for a $0.35 credit. That's a potential 7.5% return (56.1% annualized*) and the stock would have to rise 9.8% to cause a problem.
Covered Call Trade
If you like the stock but wish to lower your cost basis on a new position, you may want to consider a 9/21/18 $130 covered call. Buy MAR shares (typically 100 shares, scale as appropriate), while selling the 9/21/18 $130 call for a debit of $124.55, per share. The trade has a target assigned return of 4.4%, and a target annualized return of 32.5% (for comparison purposes only).The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Originally published on InvestorsObserver.com
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
